Friday, May 31, 2019

Reading the Tea Leaves Part III

Here is what the market is predicting for interest rates:


Rate 3 month 6 month 1 year 2 year 3 year 5 year
Jun 21, 2019 2.35% 5.875 5.875 5.875 5.875 5.875 5.875
Sep 21, 2019 2.35%
5.875 5.875 5.875 5.875 5.875
Dec 21, 2019 2.10%

5.25 5.25 5.25 5.25
Mar 21, 2020 2.10%

5.25 5.25 5.25 5.25
Jun 21, 2020 1.85%


4.625 4.625 4.625
Sep 21, 2020 1.85%


4.625 4.625 4.625
Dec 21, 2020 1.60%


4 4 4
Mar 21, 2021 1.60%


4 4 4
Jun 21, 2021 1.60%



4 4
Sep 21, 2021 1.85%



4.625 4.625
Dec 21, 2021 1.85%



4.625 4.625
Mar 21, 2022 2.10%



5.25 5.25
Jun 21, 2022 2.10%




5.25
Sep 21, 2022 2.10%




5.25
Dec 21, 2022 2.10%




5.25
Mar 21, 2023 2.10%




5.25
Jun 21, 2023 2.10%




5.25
Sep 21, 2023 2.10%




5.25
Dec 21, 2023 2.10%




5.25
Mar 21, 2024 2.10%




5.25
Total interest paid
5.875 11.75 22.25 39.5 58 100
Num quarters
1 2 4 8 12 20








Total Annualized Return
2.37% 2.36% 2.23% 1.96% 1.90% 1.92%
Actual as of 5/31
2.35% 2.35% 2.21% 1.95% 1.90% 1.93%

Interest rates will drop in December, again in June 2020 and again in December 2020.  That is 3 interest rate cuts already predicted.  And rates will remain below 2.25% through 2029.

I think this is predicting a stock market crash in October.  Only such a crash would make the Fed cut rates.

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